Are Economists Clueless?

Will Wilkinson has been on a kick lately bashing economists (Macro-economists, to be clear). I can’t say I blame him. Macro-economics is far from a muture science, and is nearly devoid of empiricism. But, these are the guys who end up in policy making positions, and who policy makers listen to when it comes to questions of the economy. And we currently have A LOT of questions about the economy.

If booms or recessions are really based in coordinated psychological changes, then why should we think that monetary or fiscal policy is the most relevant policy lever? If the thoughts and feelings of the population are the issue, then maybe the real problem is that the mass media are unduly scaring people. Wouldn’t it follow, then, that good economic policy would have at least as much to do with controlling the media as controlling the money supply? If the problem with handing Maria Bartiromo a script of state-mandated talking points is that it wouldn’t work, how do we know that?

Again, economics needs to be more experimental. There is a trend in Micro-economics in this direction. But, micro-economics is about individuals interacting with individuals (or individual firms interacting with other individual firms) which makes experimentation far easier. Macro-economics is about the aggregate effects of all the actors in a society doing what it is they do. It’s a complex adaptive system, and these are not easy to study. But, doing a better job is a worthy goal.